The National Board of Revenue (NBR) has extended the VAT exemption on metro rail tickets for another year, allowing the current relief to remain in effect until December 31, 2024. The NBR issued an order regarding this on Monday.

According to the existing VAT law, a 15% VAT is levied on tickets for air-conditioned trains. However, metro rail, being fully air-conditioned and a public transport service, was initially exempt from this tax upon its launch. The exemption followed a request from the operating company, Dhaka Mass Transit Company Limited (DMTCL), after the metro rail service began.

In its order, the NBR acknowledged that metro rail has become one of the most modern and popular modes of public transport in Bangladesh. The metro system plays a crucial role in alleviating traffic congestion and reducing commuting hours, thus contributing significantly to the efficiency of the workforce. To make the metro service even more accessible and cost-effective, the NBR has continued to exempt VAT on metro rail tickets.

The order, issued under section 126(3) of the VAT Law, is effective immediately.

The metro rail service, which began its operations from Uttara to Agargaon in December 2022, is now fully operational up to Motijheel and will eventually be extended to Kamalapur. Currently, around 250,000 passengers use the metro rail service daily.

In early 2023, the NBR had proposed the imposition of VAT on metro tickets. On January 22, 2023, the then-commissioner of the Dhaka South VAT Commissionerate, Shawkat Ali Sadi, wrote a letter to DMTCL urging them to implement the VAT. After multiple meetings with metro authorities, the NBR decided to hold off on enforcing the VAT at that time.

In May 2023, the NBR issued a notification confirming that the VAT exemption on metro rail tickets would be extended until June 2024. This exemption has now been prolonged for an additional year.